Before we get into all the details of what an NFT is, we first need to have a brief understanding of Blockchain and how it operates. That being said, let’s dive into what a Blockchain is and how it operates.
In a nutshell, Blockchain is a digital database that records transactions from networks all over the world. It’s a decentralised system regulated by the people who use it. It is well recognised for playing an important role in cryptocurrency systems. It keeps a secure, decentralised record of transactions. The novelty of Blockchain is that it ensures the accuracy and security of data records and produces confidence without the requirement for a trusted third party.
Blockchains are also unchangeable. This means that data is irreversible once it is placed into the Blockchain. It is forever recorded and may be viewed by anybody.
So What Exactly Are NFTs?
NFTs in essence are Non-fungible Tokens. Basically, our whole economy is split into two – fungible tokens and non-fungible tokens.
So what’s the difference?
When an asset is fungible, it can be replaced by another identical object. Physical money and cryptocurrency are both interchangeable. This means they can be exchanged or traded for one another. They have the same worth – one Bitcoin is always the same as another bitcoin, one pound is always the same as another pound.
NFTs are distinct. Each contains a digital signature that prevents NFTs from being traded for one another. Each NFT is one-of-a-kind and cannot be interchanged. NFTs may be purchased and sold on digital marketplaces using cryptocurrency.
NFTs can come in many different forms whether it’s a work of art, a game, a collectible, a piece of music, a photograph, or a film, or it can be an original invention that only exists in digital form. An NFT may be created out of almost anything.
Currently, NFTs are usually associated with digital art, music and digital collectables (think of a digital rare Pokemon card). Once you understand NFT culture you can grasp how the technology has much more potential.
NFTs have proven important for content providers in the digital environment due to their assured ownership and authenticity. Creators have more control over their digital work as they can now release something they have created and own, and earn money every time it is re-sold. Take it as a royalties scheme found currently in the music scene. Furthermore, each NFT sale is recorded on the Blockchain, providing a digital provenance that cannot be changed by anybody.
The Future of NFTs
The future of NFTs is bright and prosperous. NFTs have great potential in the music scene with musicians taking over their music ownership. Perhaps we will have an NFT music station similar to Spotify except the money goes directly to the creator. Today there are companies creating physical frames that store your digital NFT similar to the old digital photo albums commonly found in households. Now you can proudly showcase your NFTs in the physical space.